(1) Greatly simplifies necessary steps in supplying materiel, by eliminating the
creation of the requisition (and associated follow-on actions) and separate MCA validation.

(2) Removes training requirements and error corrections associated with contractor
submission of requisitions.

(3) Ensures better control, timeliness, and visibility of materiel requirements and
status

(4) Establishes DoD standard methodology for providing GFM based upon the Bill of
Materials as an optional business process for all Components under modernization.

b. Disadvantages: There is no flag within the materiel release order or subsequent
shipment status that will enable Integrated Data Environment (IDE)/Global Transportation
Network (GTN) Convergence (IGC) to identify a GFM “push” vs. a gap in the IGC requisition
history. DLA may consider adoption of a value within these two transactions to facilitate proper
interpretation by a third party such as IGC for a future enhancement.

7. Impact:

a. Publications: DLA (as the initial implementing Component) must request update to
DoD Supply Chain Materiel Management Procedures.

b. Implementation: This process is already implemented.

c. Metrics Impact: May impact business rules for Materiel Receipt Acknowledgement
(MRA) reports and Logistics Response Time (LRT).

d. Integrated Data Environment (IDE)/Global Transportation Network (GTN)
Convergence (IGC): There is no unique data content which will facilitate recognition of this
process. The Materiel Release Order will provide initial visibility and it is understood that IGC
logic will need to be modified to allow this as an approved business process.

e. DLMS Data: There are no new DLMS data requirements.


2. Army detail comments are:
a. FMS - No impact on US Army FMS
b. SCE-BTL - Non-concur, with the following comments.

(1) The proposed definition of "Bill of Material (BOM). A
list of the raw materials/components parts, etc., and the quantities
of each needed to assemble/manufacture an end item or final
product based on a unit of allowance within the BOM The BOM
identifies component material to be provided to the contractor as
Government Furnished Materiel.", is not acceptable to Army. We
do not provide all items on a BOM as GFM. A better definition
would be "Bill of Material (BOM), A list of the raw
materials/component parts, etc., and the quantities of each needed
to assemble/manufacture/repair an end item or product."

(2) The proposed new C11.10.1. states "This procedure
eliminates the need for requisitioning GFM and subsequent
separate MCA validation. It allows the ICP/IMM to push the raw
material directly to the contractor as required by schedule and/or
usage. Status of contract and GFM component deliveries is
monitored through internal controls."

What internal controls are used for validating GFM and tracking
its issue and receipt?

(3) The proposed new C11,10.1.1. states "Under this
process, the ICP/IMM shall use internal control procedures to
monitor Consumption of raw materiel/component parts against the
receipt of items awarded by contract." What method is used to
enable the contractor to report consumption? For repair contracts,
consumption of GFM cannot be assumed based on receipt of the
items.

(4) The proposed new C11.10.1.2. refers to "stock shipments
using document numbers based upon a DLA established
DoDAAC." Is the entire new section C11.10 intended to apply to
DLA only?

(5) Section 4. (Proposed Changes), sub-paragraph c.
(Alternatives) "Standard MILSTRIP procedures based upon
requisitioning is the only alternative, but would be less efficient
than the modified DLA process under ERP and is not under
consideration." Army disagrees with this statement, in that it is
not easier to create a stock transport order than to create a
requisition.

(6) Section 6, ADVANTAGES AND DISADVANTAGES:
(a) Advantages (tangible/intangible):

- Greatly simplifies necessary steps in
supplying materiel, by eliminating the creation of the requisition

does not require Army
adoption. Army comments
have been used to
improve/clarify the wording of
the approved change.

This change documents an
alternative process that works
well within the ERP design
when applicable to an intra-
Component usage. The
business rules for the ‘push’ of
GFM are not required
functionally. This change
imposes no processing change
upon the Military Services.

The MILSTRIP language has
been updated to make the
above limitations more visible,

(1) Definition updated per
request.

(2) Sentence revised to clarify
reference to MILSTRIP MCA
validation.

(3) This process may not work
for all commodities. For
example, if X amount of
materiel is expected to produce
Y number of uniforms, receipt
of the uniforms measures
consumption.

(4) No, not restricted to DLA.
It has been adopted by DLA as
a better business model under
ERP. It is being incorporated
in MILSTRIP to make it
available to other Components
and to provide high level
documentation on how it
works. This documentation
will allow others, such as IGC,
to correctly interpret
transactions.

3



the ICP/AIMM to push the raw material directly to the contractor as required by schedule
andor usage.

C1.10.1.1. Upon contract award for production of an end item or final
product, the BOM becomes the basis for determining the quantity of GFM required by the
contractor. These deliveries shall only include stocked raw material/component parts that the
Government provides at no separate charge to the contractor for assembly/manufacture of the
end item/final product. Under this process, the ICP/IMM shall use internal control
procedures to monitor consumption of raw materiel/component parts against the receipt of
items awarded by contract.

C11.10.1.2. The ICPAMM shall prepare materiel release orders for stock
shipments using document numbers based upon a DLA established DoDAAC. The ship-to
location cited in the release order shall identify the contractor DoDAAC authorized to receive
GFM. If no DoDAAC is assigned, the contractor facility may be identified by Commercial and
Government Entity (CAGE) or as an exception ship-to address. The storage location shall
provide shipment confirmation to the ICP/AIMM for monitoring of GFM shipments and shall
prepare shipment status. For contractors without capability to accept MILS/DLMS
transactions, status of the GFM component delivery shall be provided upon request by the
contractor. The assembled/ manufactured end items may be shipped directly to customers or
shipped to a storage location for later issue.

C11,.10.1.3. Use of the above business process does not relieve the ICPAMM
from management reporting requirements required by DoD 4140.1-R, DoD Supply Chain
Materiel Management Regulation.’ Materiel Receipt Acknowledgment is required for GFM,
including pushed shipments, under MILSTRAP procedures.

C11.10.1.4. This process is discretionary and may not be applicable to all
commodities and contracts requiring GFM. This process may only be used to support GFM
requirements satisfied by the Component issuing the contract (that is, by design, it does not
support inter-Component materiel support) .

ce. Alternatives: Standard MILSTRIP procedures based upon requisitioning is the only
alternative, but would be less efficient than the modified DLA process under ERP and is not
under consideration.

5. REASON FOR CHANGE: This ADC is provided to document within DoD guidance the
procedures developed by DLA to supply GEM to contractors using technology and controls
inherent to DLA’s enterprise resource program.

6. ADVANTAGES AND DISADVANTAGES:

a. Advantages (tangible/intangible):

' This reference will be updated upon publication of DoD 4140.1-M, DoD Supply Chain Materiel Management
Procedures.


Enclosure 1, Comment Resolution

Component Comment Response
Navy Concur
Air Force Concur

Here is a detailed explanation of why IGC is asking about an
Integrated indicator to differentiate these 940R push MROs, from normal While there is a preference for
Data ones in response to a 511R. The bottom-line is that IGC has no coding within transactions to
Environment — | way of knowing if they are missing the 511R or there is never support recognition of unique
(IDE)/Global | going to be one, so they need a trigger to wake up the process to business processes, no new
Transportation | say treat this 940R like a requisition. identifiers will be added to the
Network 856S.
(GTN) In a nutshell, when IGC gets a 511R that is a Document Identifier
Convergence | =A0 then it will create a "supply action" called 'requisition There is no requisition in this
(IGC) creation’. process. The 940R, 945A, and

When IGC gets a 511M, it will create a supply action called
‘requisition modification’.

If I get a 511M and there is no 'requisition creation’ action present
(because we never received the 511R), it will ALSO create a
‘requisition creation’ supply action. (in other words, the AM acts
like the AO if the AO doesn't exist.)

This is exactly the same for the Document Identifier-=AT. The AT
is a follow-up that acts like an AO if the AO does not exist.

Also same for the AC6/AK6 cancellation requests that come in the
940R. They act like a cancellation if no cancellation exists.

Keep in mind that IGC is trying to integrate all these transactions
into a single set of tables.

Having said all that, in the case we are talking about (the GFM-
push 940R transactions) this transaction effectively is a 511R and
a 940R so I will create a 'Materiel Release Order’ supply action
and | also have to create a 'requisition creation’ action.

IGC needs to know how to definitively identify them so they can
be handled correctly.

856S will be available to IGC.
Alternative logic must be
established to allow the 940R
as the first (initiating) action.

Unfortunately, this is an
implemented business process
and any changes purely for
IGC recognition of the
transaction process would not
be cost effective or prioritized
with the current workload.

AF Supply
Chain Policy

HQ USAF/
A4LM

Non-concur w/comment.

With the current policy and procedures in place we are able to
monitor, track and maintain visibility of GFM assets. With the
new proposed change we lose that ability.

AFMAN 23-110, USAF Supply Manual, V3 P8 CH 17,
Production Contractor Requisitions For Government Furnished
Material (GFM)

This is an optional process and
does not require Air Force
adoption. Air Force
comments have been used to
improve/clarify the wording of
the approved change.

This change documents an
alternative process that works



(and associated follow-on actions) and separate MCA validation.
Are the follow-on actions for a stock transport order different than
a sales order?

- Removes training requirements and error corrections
associated with contractor submission of requisitions.

- Ensures better control, timeliness, and visibility of
materiel requirements and status. We do not feel that this process
provides the control of GFM that is required,

- Establishes DoD standard methodology for
providing GFM based upon the Bill of Materials as an optional
business process for all Components under modernization. Army
has already rejected this business process as part of its
modernization.

- SDRs and QDRs were not addressed in this proposed
change. SDRs and QDRs are not submitted by PR/PO. The
removal of the MILSTRIP requisitioning will not support the
submittal of SDRs and QDRs.

(7) How will this proposed change affect the financial
processes required for funding and management of GFM? Stock
transport orders or free issue, so are funds not checked/committed/
obligated until time of consumption?

(a) The stock transport order
is based upon the contract
requirements and therefore
does not need to be revalidated
when used on an intra-
Component basis.

SDRs may be submitted
against GFM shipments when
shipment documentation
differs from actual receipt by
the vender, This process only
applies on an intra-Component
basis, so there is no concern
about another Service/Agency
processing the SDR (or
Product Quality Deficiency
Report).

DLA

Concur.
There is no intended impact on current processing.



DEFENSE LOGISTICS AGENCY
HEADQUARTERS
8725 JOHN J. KINGMAN ROAD
FORT BELVOIR, VIRGINIA 22060-6221

IN REPLY
REFER TO

DLMSO August 03, 2010

MEMORANDUM FOR SUPPLY PROCESS REVIEW COMMITTEE MEMBERS

SUBJECT: Approved Defense Logistics Management System (DLMS) Change (ADC) ADC
389, Inventory Control Point /Integrated Item Manager (ICP/IMM)-Directed
Shipments of Non-Requisitioned Government Furnished Materiel (GFM) (Staffed
as PDC 383)

The attached change to DOD 4000.25-M, DLMS, is approved.

Addressees may direct questions to the DLMSO point of contact Ms. Ellen Hilert, Co-
Chair, Supply Process Review Committee, at 703-767-0676; DSN 427-0676; or, e-mail:
Ellen.Hilert@dla.mil, Others must contact their Component designated Supply Process Review

Committee representative.

DONALD C, PIPP

Director

Defense Logistics Management
Standards Office

Attachment

cc:
ADUSD(L&MR)SCI


17.1.1. Scope. The Government Furnished Material (GFM)
application is a non-aggregating process within the Special
Support Stock Control (SSSC) system (D035D). The purpose of
this application is to process authorized production contractor
requisitions for GFM in support of government funded contracts
and to insure that only materiel authorized by the contract is
issued.

17.2, Policy. The policy and procedures contained in this chapter
apply to processing production contractor requisitions for GFM
through the SSSC system. Information contained in this chapter
is based upon procedures contained in various sections and
appendix B of contracts under which a production contractor is
authorized to order materiel from government activities as GFM
as well as GFM management policy found in the various
regulations, manuals and instructions.

17.6. Supply and Shipment Status Processing.

17.6.1. Supply and shipment status transactions generated from
and received by SSSC will be recorded in the requisition control
file (see AFMAN 23-110, Volume 3, Part 8, Chapter 13 of this
volume and part of AFMAN 23-110 for valid supply status
codes).

17.6.2. As a result of initial processing for production contractor
requisitions, SSSC will generate supply status transactions having
document identifier 'AE1/AE2' to the requisitioner (see
Attachment 17A-5 for an outbound 'AE1/AE2' transaction record
layout).

Proposed Changes ICP/IMM-Directed Shipment of Non-
Requisitioned GFM based on a Bill of Materiel (BOM)

The below paragraphs refer to material being monitored through
internal control. With the new proposed change, how would you
be able to monitor, track and maintain visibility of these assets. Is
there a standard procedure in place to record GFM component
deliveries and monitor consumption of raw material/component
parts against the receipt of items awarded by contract?

C11.10.1. Status of contract and GFM component deliveries is
monitored through internal controls.

C11.10.1.1, Under this process, the Inventory Control Manager
and Integrated Material Manager (ICP/IMM) shall use internal
control procedures to monitor consumption of raw
material/component parts against the receipt of items awarded by
contract.

well within the ERP design
when applicable to an intra-
Component usage. The
business rules for the ‘push’ of
GFM are not required
functionally. This change
imposes no processing change
upon the Military Services.

The MILSTRIP language has
been updated to make the
above limitations more visible.

This process may not work for
all commodities. For example,
if X amount of materiel is
expected to produce Y number
of uniforms, receipt of the
uniforms measures
consumption, This process
does not remove the
overarching requirement for
monitoring GFM under Supply
Chain policy.

Army

1. Army National Community noncur with PDC 383.

This is an optional process and

2



ADC 389
ICP/IMM-Directed Shipments of Non-Requisitioned GFM
1. ORIGINATING SERVICE/AGENCY AND POC INFORMATION:
a. Requiring Agency: DLA-J33, 703.767.4922

b. Sponsor: Chair, Supply Process Review Committee. POC: Ms. Ellen Hilert, at 703-
767-0676; DSN 427-0676; or, e-mail: Ellen.Hilert@dla.mil.

2. FUNCTIONAL AREA: Supply
3. BACKGROUND:

a. Legacy business practices within Defense Logistics Agency (DLA) involved either
generation of a requisition in MILSTRIP format for the contractor or receipt of a requisition
from a contractor. These business practices required Management Control Activity (MCA)
validation to assure that the contractor was authorized to receive the requested material in the
requested amount under the terms of the cited contract.

b. Under Enterprise Business Systems (EBS), these business practices no longer apply to all
DLA- issued contracts requiring Government Furnish Material(GFM). DLA no longer acts as
the MCA for internal DLA contracts; however, requisitions submitted to DLA that support other
Component-managed contracts remain subject to MCA validation and conform to MILSTRIP
Chapter 11 procedures.

¢. Under current practice, standard SAP Subcontracting Purchase Order functionality is
used in EBS to support internal DLA contracts/purchase orders that require DLA owned and
stocked GFM component materials to be pushed to a vendor. Subcontracting Purchase Order
functionality tracks GFM component usage from shipment confirmation on the delivery of the
GFM component to receipt of the end item material.

d. Under this process no requisitions are involved; instead, a depot shipment is directed
against the DLA contract/subcontracting Purchase Order (PO). Upon confirmation from the
storage location that the delivery has been shipped the material is moved from unrestricted issue
at the storage site to a subcategory “Stock Provided to Vendor (SPTV).”

e. There is a group Bill of Material (BOM) which identifies the unit of allowance of each
component required to assemble one end item. Then there is a transactional BOM which is
unique to each subcontracting PO. The transactional BOM uses the unit of allowance required to
assemble one end item as identified in the group BOM and multiplies it times the number of end
items in the specific PO to compute the total component requirement.

f, Internal to DLA Enterprise Business System (EBS), status of contract and GFM
component deliveries are monitored through use of SAP transaction ZSV_ZE2S_Change
Manage Subcontracting Report. GFM usage is tracked by inventory category SPTV. A drill

2


down exists which allows visibility of the material in SPTV status and the vendor CAGE to
which the material is obligated. As an example if 100 EA of a material is shipped from plant
DDSP to vendor 12345 (CAGE), the material would now be recorded in inventory as 100 EA in
SPTV under DDSP. The drill down would show 100 EA in SPTV status for Vendor 12345.
Material in SPTV status is considered obligated to the Vendor CAGE not a specific
contract/purchase order. Material in SPTV status is not considered available to support other
requirements.

4. PROPOSED CHANGE(S):

a. Requested Change: This proposed change documents an alternative process for
providing GFM to contractors without initializing the requirement via a requisition. Under this
process materiel is “pushed” from the supply system rather than the “pulled” per current
MILSTRIP procedures. The ICP/IMM provides GFM to the contractor based upon the terms
which establishes a list of raw materiels/component parts needed to manufacture the end item,
and which will be provided by the Government without separate charge to the contractor. This
list of materials which forms the basis for the ICP/IMM directed shipments is referred as a Bill
of Material (BOM). The ICP/IMM directs issue of stocked materiel to the contractor
responsible for the end item. This process does not apply to direct vendor delivery of GFM to a
DLA the contractor. Internal control processes are employed to track and schedule GFM
shipments, and measure usage against receipt of the end item(s) under the terms of the contract.

b. Procedures. Revise MILSTRIP as follows. An equivalent change will be posted to
the DLMS Manual.

(1) Insert new definition for Bill of Material.
DEFINITIONS

Bill of Material (BOM). A list of the raw materials/components parts, etc., and the quantities
of each needed to assemble/manufacture/repair an end item or final product.

(2) Insert new paragraphs describing proposed procedures.
CHAPTER 11, CONTRACTOR ACCESS TO GOVERNMENT SUPPLY SOURCES

C11.10. ICPAMM-Directed Shipment of Non-Requisitioned GEM based on a Bill of Material
(BOM)

CU1.10.1. ICPAMM-directed shipments of GFM may be managed through the use of a
Bill of Material (BOM) as identified under the terms of the DoD contract. In this context, the
BOM identifies the raw materiels/component parts needed to assemble/manufacture/repair the
end item or final product. Based on the unit of allowance, the number/amount of GFM
component material needed to accommodate the total number of end items to be
manufactured/assembled/repaired on a specific contract/purchase order, may be calculated
and provided. This procedure eliminates the need for separate GFM requisitions for the
component material and subsequent MILSTRIP MCA validation. Instead, this process allows

3